Hours of work goes into managing and administering your company’s 401(k) and at times it may seem like a mountain of work for a molehill of appreciation. However, as someone who spends every day working on 401(k) plans, I am here to tell you that they matter – a lot! They matter to your company, your people, and you.
1. The 401(k) plan offers your employees a powerful savings vehicle
The 401(k) has many qualities that make it an attractive option for savers. High deduction limits (in 2017 employees under the age of 50 can contribute $18,000, those over 50 may contribute an additional $6,000) allow employees to save a significant amount into their 401(k) through simple payroll deductions; Roth options allow employees the ability to choose whether to be taxed now or taxed later; and features like automatic enrollment and automatic deferral increase allow employees to begin and increase their deferral amounts without proactive action.
2. 401(k)s can be a more financially prudent choice than a traditional investment account
Despite the confusion surrounding 401(k) fees, there are times when a 401(k) can be a better financial choice than an Individual Retirement Account. Due to the size of 401(k) plans, they may have access to shares of investments that may not be available to individual investors. This can lead to lower investment expenses. Additionally, 401(k) plans may offer access to a financial adviser who can provide financial education to you and your employees for no additional cost.
3. 401(k)s can lead to happier, more loyal employees
In the 2017 Workplace Benefits Report published by Bank of America, they found that 31% of employees selected a 401(k) plan as their top employment benefit, second only to health benefits. This same survey found that employee’s number one financial goal was saving for retirement. Furthermore, a study conducted by Lockton Retirement Services and detailed in the report “Finding the Links Between Retirement, Stress, and Health” found that 52% of respondents reported that having a retirement savings plan helps ease financial concerns “a great deal” and an additional 43% said it helps “a little.” Additionally, those employees with access to a retirement plan in which the employer contributed to the plan reported higher levels of job satisfaction and lower incidents of physical ailments. Therefore, if your company offers a 401(k) plan that can help employees save for retirement and reduce stress, it seems highly likely that those same employees will be happier and more loyal to your company.
Your employees look to your company to help them to save for retirement. If you do not think that your current plan is achieving that goal, please call me at 205-970-9088 or email me at email@example.com and I will get to work for you today on developing a plan that works for your company and its employees.